Wind Industry Uses Federal Grants to Add Capacity

Armed with nearly $1 billion in federal grants, wind farm developers installed more capacity and got projects off the drawing board in the third quarter. Yet turbine manufacturers struggled amid excess supply, a trade group reported Tuesday.

The 1,649 megawatts of capacity installed from July through September — enough to serve the equivalent of 480,000 average households — was about 18 percent more than the year-ago quarter, the American Wind Energy Association said.

Turbine manufacturing production was less than 50 percent of what it was in the third quarter of 2008 due to a surplus in the market, said Elizabeth Salerno, the group's director of industry data and analysis. She did not have specific production figures.

The results indicate how much companies are relying on federal grants to pull the nation's battered wind industry out of the recession because other financing avenues remain difficult to access.

"It's pretty much the grant program," Salerno said. "That really allowed projects to go out, raise capital, close deals, leverage debt...without the grants, it would be more difficult to raise capital."

Renewable energy is a small fraction of all electricity used but has gained favor globally as governments and businesses seek to curb pollution and the use of fossil fuels.

The industry lost momentum as access to credit markets dried up, natural gas and oil prices fell and electricity demand diminished. Some companies shelved plans and cut jobs.

Many believe the industry will see immense growth as utilities push to meet mandates to provide a percentage of electricity from renewable resources.

Third-quarter installed capacity came from projects in the planning stages when the recession hit, forcing companies to shelve projects and lay off workers when credit became scarce.

In addition, companies also started construction on farms with a capacity of about 1,700 megawatts in the third quarter.